Due to the extended bull market in precious metals, Gold and Silver
related ETFs remain superior performers. The higher trend in both Gold &
Silver appears to still be the case after breaking out to the upside
after 3 month congestion pattern. Investment demand for both precious
metals remains strong amid QE2 and easy money policies by central banks
Based on history it's possible we are only about halfway through this
bull market in commodities and precious metals. Silver and Silver Mining
ETFs have come to market with almost immediate success by riding this
wave of investor euphoria. Investor sentiment has also lead to a strong
rise in trading volume for the leveraged precious metals ETFs as well.
This stands in stark contrast to what people were speculating on in the
90s, namely tech stocks and the next Internet IPO.
It seems that investment themes always go in cycles and each cycle ends
with a tremendous burst of buying that draws everyone in near the top of
the run. It fascinates me to see that once again precious metals are
making their way back into investor portfolios just as they did 3 decades
ago. Things could even be crazier this timer around you can hold ETFs in
almost any investment or retirement account which was not the case with
gold or silver bullion.
Gold and Silver are not the only sectors being impacted by the surge in
ETF trading, it is affecting all types of investments. Smaller commodity
markets such as palladium have really been feeling the effects of the
ETFs in this past year since PALL started trading in January. Stocks of
publicly traded companies can benefit from the same effect, right now
ETFs own $7.8 billion worth of AAPL and nearly as much of XOM as well.
This can have a positive or negative effect depending upon the mood of
investors. ETFs allow large traders and hedge fund managers to dump
million dollar sector positions much more quickly than they could using
individual stocks. These fast moves in and out of sector based trades can
cause other ripples (or waves) through out the markets, we witnessed this
last spring with the so called "Flash Crash". All this money looking for
the next hot market will keep volatility high in Gold and Silver for some
time to come.
Even though precious metals have put in one heck of a performance in the
past 10 years, there should still be some explosive moves to come. Many
gold investors believe that a collapse of the U.S. dollar will one day
cause gold and silver to soar to unprecedented levels, looking at things
I can't rule it out. When the average person starts their conversation by
talking about their Gold and Silver ETFs and how much they have made on
them, then it will be time to sell everything off. With all the bullish
and bearish ETF products out there it's no doubt that investors and
traders will be trying to position for the next big move in the months
ahead. Prices will rise, then prices will fall and the few who time it
right will make their fortunes. For most though, the ending will be as
sad as the real estate bust or the end of the tech bubble.
Visit one of our informational web sites for additional information on
Gold ETF products or investing in the Silver Market using ETFs. It's
worth taking a look at how the various ETF products have performed in
relation to one another.